Microsoft cuts OneDrive prices, increases capacity

Microsoft will dramatically increase capacity and lower prices for OneDrive, increasing pressure on other cloud storage providers and also sweetening the deal for prospective and current Office 365 customers.

The company will more than double to 15GB the storage capacity in the free, stand-alone OneDrive service for consumers. People get access to this free OneDrive storage also when they sign up for Office Online, the free, lightweight Web-based version of Office, and also when they sign up for Outlook.com, Microsoft's free webmail service.

Microsoft is also slashing the cost of additional storage for OneDrive. An extra 100GB will now cost US$1.99 per user/month, down from $7.49, and 200GB will cost $3.99 per user/month, down from $11.49.

For Office 365 Home and Office 365 Personal customers, Microsoft is also sending OneDrive storage through the roof, from 20GB to 1TB per user.

That means Office 365 Home, which costs $9.99 per month and comes with five user licenses, includes 1TB for each person, while Office 365 Personal, which costs $6.99 per month, comes with 1TB for its one licensed user. The increase to 1TB also applies to Office 365 University, which is for college and university students and costs $79.99 for four years. These Office 365 editions include the full-featured versions of apps like Word, Excel, PowerPoint, OneNote, Outlook and others.

"We want to give you enough storage space so you use OneDrive for everything," said Angus Logan, OneDrive's marketing director.

The aggressive move by Microsoft tightens the competitive screws on rivals like Dropbox, Apple and Google.

Dropbox options for consumers start with a free 2GB plan, which pales in comparison with the 15GB OneDrive now offers right out of the box.

People can upgrade to Dropbox Pro, which gives them 100GB for $9.99 per user/month, which again doesn't compare well with the new $1.99 per user/month OneDrive pricing for that same amount of storage. Dropbox Pro also has options for 200GB for $19.99 per user/month and 500GB for $49.99 per user/month.

Meanwhile, the Microsoft move seems directed at closing the competitive gap with Google's consumer cloud storage offerings. With a free Google account, people get 15GB of storage for files in Drive, Gmail messages and Google+ photos, and can purchase 100GB of additional storage for $1.99 per month, price levels Microsoft is now matching. A free Google account also includes Docs, a set of office productivity apps that competes against Office Online.

Google account holders can also purchase additional storage of 1TB for $9.99 per month, 10TB for $99.99 per month, 20TB for $199.99 per month and 30TB for $299.99 per month.

Apple's iCloud includes 5GB of free storage. Customers can buy an additional 10GB for $20 per year, 20GB for $40 per year and 50GB for $100 per year. The company plans to later this year lower the 20GB plan to $0.99 per month and offer a 200GB option for $3.99 per month.

Box, whose service is aimed primarily at businesses, nonetheless offers individual free accounts with 10GB of storage, and a Starter tier for teams of up to 10 people with 100GB of storage for $5 per user/month.

The Dropbox enterprise version, called Dropbox for Business, costs $15 per user/month for a minimum of five users and provides unlimited storage.

Microsoft also made an aggressive move in the enterprise cloud storage space in April, when it announced an increase in per-user storage of OneDrive for Business from 25GB to 1TB. OneDrive for Business, formerly called SkyDrive Pro, is the business version of OneDrive, designed for employees to store, share and sync their personal work files.

The increase applied to the stand-alone version of OneDrive for Business, which costs $5 per month with the free Office Online, and to OneDrive for Business bundled with the workplace versions of Office 365.

Google also offers enterprise storage with its Apps for Business email and collaboration suite, which costs $5 per user, per month. Apps for Business includes 30GB of Gmail and Drive storage and customers can purchase more storage in various increments, including 1TB for $89 per user, per month.

Cloud storage has become extremely popular among consumers and businesses because it lets users access their files and documents from their different devices -- PCs, tablets, smartphones -- and share them easily with friends and colleagues.

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